Can A Broker Help Both Parties In A Transaction?

Short answer is: Yes...kind of.

Whether you’re signing a listing contract as a seller, or submitting an offer as a buyer, in Oregon’s real estate forms there are a number of additional documents to sign. Brokerages also have documents specific to their company that a buyer may sign in addition to the contract docs. Most of these documents will be disclosures, meant to educate the seller or buyer on a specific issue, or for them to indicate their knowledge of a particular fact.

One of these disclosures is call the Disclosed Limited Agency Disclosure Form. It’s purpose is to educate the buyer or seller on the topic of Disclosed Limited Agency (DLA). Which is also the purpose of this blog post. HURRAH! Hey at least you’ll know about it for next time you buy or sell a house in PDX, right?

So what is DLA? In short, it’s the type of agency relationship that a broker has when they are representing both principals in a transaction. This can come about when a broker takes a listing, and then an unrepresented buyer asks the seller’s broker to write an offer as their buyer broker also. A broker may also find themselves handling a transaction between members of a family, where both the buying family member and the selling family member agree to use the same real estate broker.

In any case, the agent’s ability to advise EITHER client is very limited. Because they still owe their client’s the fiduciary duties of confidentiality, they are limited in how much information and help they can offer to both the buyer and seller. The broker becomes simply an intermediary between the two parties. It is more advantageous for most principals (buyer or seller) in a real estate transaction to secure their own agent. A breach of the broker’s fiduciary duties is very serious and can lead to license suspension, revocation, and/or financial penalties.

NOW! Here is an important fact, when it comes to DLA. A buyer and seller can be in both a single agency relationship, and a disclosed limited agency relationship AT THE SAME TIME! Sounds kinda like a soap opera, right? Well that’s where the drama ends, fortunately. The way that brokerages are structured is what leads to this. A principal broker managing an office can have many brokers for which they are responsible. While each individual broker handles creating the contracts and developing their business, those contracts ultimately belong to the brokerage and principal broker where they hang their license. Because of this a buyer or seller may be in single agency relationship to their broker, but in DLA with the principal broker.

E.G. Seller Mark signs a contract to list with Devin Arthurs, a broker with Premiere Property Group. Devin Arthurs’ principal broker is Kelly Smith. Buyer Bill writes an offer that gets accepted with Mary Newby, also a broker with Premiere Property Group. Mary’s principal broker is also Kelly Smith. In this situation, both the seller and the buyer are in single agency relationships with Devin Arthurs and Mary Newby, respectively, but are in DLA with Kelly Smith.

The above example is a more common occurrence, particularly in areas where brokerages can grow to large numbers. In these situations, the clients should feel comfortable knowing that the principal broker’s function is mainly to oversee the gathering of all appropriate paperwork.

If you have any other questions about agency relationships or DLA, we’d love to hear from you!